Highlights:

* SKFH recorded a profit of NT$0.46bn in Q3, 2,973.3% higher compared to Q2 2009. After-tax loss in the first nine months decreased to NT$0.16bn. EPS was -NT$0.02.

* Excluding one-off items such as CDO/CBO losses (NT$3.52bn) and DTA adjustment (NT$1.00bn), profit would have been NT$4.36bn.

* Total group asset reached NT$1,879bn, up 7.5% year-on-year.

* Shin Kong Life returned to profitability in Q3 and recorded a profit of NT$0.28bn. After-tax loss for the first nine months shrank to NT$1.04bn.

* Driven by strong FYP growth of traditional and health products (up 246.6% and 421.1% respectively), VNB grew significantly. FYP was NT$52.46bn.

* Shin Kong Bank recorded after-tax profit of NT$449 million.

* Shin Kong Securities contributed NT$266 million to group profit.

* Results of MasterLink Securities were also consolidated since SKFH's investment in the company already exceeds 25%.

Shin Kong Life: solid core protection business

Driven by improving investment income and lower expenses, SKL returned to profitability in Q3 and recorded a profit of NT$0.28bn. After-tax loss in the first nine months decreased to NT$1.04bn. ROA and ROE were -0.1% and -3.4% respectively. If one-off losses had been excluded, the company would have recorded an after-tax profit of NT$3.48bn.

FYP for the first nine months was NT$52.46bn which translates into a market share of 8.2%. Total premium was NT$133.39bn.

Traditional and interest-sensitive products continued to record strong sales and accounted for 36.4% and 44.9% of overall FYP respectively. Traditional products contributed NT$19.11bn, up 246.6% year-on-year. Health premium also grew 421.1%. Due to robust demand for whole-life health coverage, cumulative FYP from "Health 99" (whole life health insurance) and "Comfort 99" (whole life surgery insurance) reached NT$3.35bn and NT$0.51bn as of the end of the first nine months. Contribution to VNB was significant given the products' high VNB margin. Sales of investment-linked products also started to recover, generating FYP of 4.72bn in Q3.

Cross-selling remained strong with Shin Kong Bank contributing NT$14.59bn of FYP (42.2% of bancassurance premium). Going forward, more emphasis will be put on higher margin products and products that generate higher fee income.

On the quality front, 13-month persistency was 83.6%. 25-month persistency slightly improved to 81.6%.

As global markets recover, annualized investment return for the first nine months significantly improved to 4.12% from 1.96% in 2008. In addition, Shin Kong Life successfully auctioned a piece of land in Taichung which will generate a capital gain of NT$1.00bn for Q4. Going forward, SKL will continue to dynamically manage its real estate portfolio to capture stable rental income and capital gains.

Shin Kong Bank: revenues started to rebound while expenses continued to come down

After-tax profit for the first nine months was NT$449 million (up 119.4% year-on-year); after tax profit for Q3 2009 was NT$218 million, up 271.4% from Q2 2009.

In order to strike a better balance between risk and return in this low interest environment, risk management has been strengthened and high risk loans recovered.